LAKE BUENA VISTA, FLA.  Microsoft Corp. CEO Steve Ballmer fielded and deflected a series of tough questions from both attendees and analysts this morning at the Gartner Symposium here.

In responding to questions about whether Microsoft is still using guerilla tactics to undermine IT when they don't do what Microsoft wants, Ballmer defended the singular Microsoft culture. "We have hard working, bright people who want to feel accountable, who are patient people who want to tell their story directly to the knowledge worker," he said.

When asked about the perception that Microsoft is an evil empire set on world domination Ballmer said that the company is not well understood. "Nobody wants to be the 800 pound gorilla that no one can get along with. We have a lot of zest and passion. If we don't have customers, we want to know why. Just being large and passionate  it gets hard for the positive impulse to come out," he said.

After years of antitrust litigation, Microsoft has learned that "we have to do a better job of reaching out to our partners," Ballmer said. "Our industry is built on having an ecosystem. We are humbled that people we thought were close partners didn't come out and support us."

As a result, Ballmer said he has held discussions with Oracle Corp. CEO Larry Ellison to insure that Microsoft and Oracle products work together. Also Ballmer pledged that Microsoft would work with IBM on key XML(extensible markup language) technologies. "We said our company has to be viewed more positively by the computing industry."

In the wake of the September 11 terrorist attacks, Microsoft responded immediately by making "significant contributions" to relief efforts and dedicated staff in the New York and Washington, D.C., areas to help customers get back up and running.

"Then we have the combination of Nimda and Code Red, and it all dials up the need to focus on what it takes to deliver and deploy secured environments," he said. Toward that end, Microsoft will release a new security toolkit by year's end to automatically deploy new security patches, and it is working on tools to "lock down" its IIS server.

Microsoft, with its history of targeting and eventually dominating market segments, has now set its sights on the data center, where vendors such as Oracle and IBM dominate in supporting mission critical applications.

"We're in the game, but we're not as popular as we would like to be," Ballmer quipped. "But we're known as a company of persistence. We'll keep working it."

Despite the fact that the software industry is not growing today like it has in the past, Ballmer still believes that software will "be what defines the way people work and live." Growth will come from different areas, such as XML, Web services and security, he said.

Several sensitive pricing questions came out of both attendees and analysts. Given Microsoft's domination, the company could charge more for its software than it does, asserted one analyst. "We have good competition. Customers don't upgrade if the new versions aren't good," said Ballmer, asserting that for the number of hours Microsoft software is used, the price is very low. "We live in an competitive environment," he added.

Ballmer also fielded questions about the innovation Gartner analysts said was lacking in its Office software. "You have seen some of that in Office XP. Smart Tags that let you plug into other databases is real innovation. The collaboration infrastructure is built in. But we can do more. We're hard at work on the next release," he said.

Despite users' resistance to changes to fundamental components of the operating system such as the file system, Ballmer promised that "new paradigms" were "two Windows releases away."

Ballmer also responded to still more questions about the value of its .Net initiative. "The number one challenge for users is integration. The CEO wants an integrated view of customer performance. Trading systems don't talk to each other. [Users are struggling with] how to get applications to talk to each other," Ballmer said. "XML is the foundation to go after these issues. Integration is key to XML. .Net will be the leading platform to take advantage of it."

Ballmer also took pot shots at rival Sun Microsystems Inc.'s Liberty Alliance initiative, which is a counter to Microsoft's Passport authentication technology. "I don't think the Sun thing has zero possibility of mattering to customers. Where are the applications? How many users does Sun have? They couldn't even get AOL to participate," he said.

Ballmer also defended Microsoft's treatment of Sun's Java development language. In 1995 Microsoft said "it was the right thing to do for customers." But Microsoft had to find a way to innovate and add value. With the court settlement it reached with Sun, "We can't participate in any meaningful way in the Java world," he asserted.

In concluding the interview, Ballmer defended Microsoft's continuing practice of contractually requiring that customers not share performance testing information on Microsoft products with others. "This is industry practice," he said. "There are people who are unscrupulous about the way they do benchmarks. If a customer did a benchmark and shared it with another customer, we're not going to sue them. They just need to let their account rep know and we'll send off a letter."

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